Funding gap could derail Bombardier streetcar deal

TORONTO (Reuters) - A C$1.2 billion ($1.1 billion) project awarded to Bombardier Inc to build a fleet of new streetcars for the city of Toronto may be in jeopardy after the federal government said the transit program would not qualify as part of its infrastructure stimulus fund.

Federal Transportation Minister John Baird said in Parliament on Friday that the project did not fall within the proper timeframe take advantage of the C$4 billion fund.

"One of the requirements of that stimulus fund is that we get projects moving quickly and that they conclude within the next two years," Baird said.

Under the agreement between Bombardier and the city, a prototype vehicle is to be delivered in 2011. The larger, more energy efficient streetcars would enter service by 2012, with all 204 delivered by 2018. The city has an option to buy another 400 for the second phase of the deal.

Financing for the contract must be completed by June 27.

Michael Ignatieff, the leader of the opposition Liberal Party, said the federal government would be missing out on a "good investment" if turned its back on the project.

"The government has an opportunity to invest in public transit, to create jobs and to move the economy forward, all for an estimated C$312 million. It sounds like a good investment to me, the kind of investment that fuels economic recovery," Ignatieff told the House of Commons.

Baird said Ottawa is already supporting several public transit projects in Toronto.
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